The newly enacted Payment Services Law in Ukraine necessitates tight collaboration between the National Bank of Ukraine and private payment companies.
The National Bank of Ukraine (NBU) is now formally permitted to issue a digital currency, allowing the Ukrainian government to move on with its central bank digital currency (CBDC) plans.
According to a Thursday announcement, Ukrainian President Volodymyr Zelenskyy has signed a law titled On Payment Services, allowing the country’s central bank to issue a CBDC, or digital hryvnia.
The new law gives the NBU the authority to create regulatory sandboxes to test payment services and instruments based on emerging technologies. According to the release, the new legislation also mandates tight collaboration between the Ukrainian central bank and local startups in the payment market, taking into account private sector demand.
The On Payment Services bill, which was first adopted by the Ukrainian parliament in late June, aims to establish open banking, which is the practice of sharing access and control to customer financial information through third-party applications. The bill is designed to boost the country’s financial technology growth by allowing private fintech companies to collaborate with banks and expand their business options.
The newly signed bill is also intended to adapt Ukrainian legislation to the legal framework of the European Union, which would eventually allow the country’s payment system to be integrated with the EU’s, according to the release. The legislation is based on current requirements and incorporates European regulatory standards, such as the Payments Service Directive 2 and the E-Money Directive.
The NBU has been studying the possibility of creating a digital currency for some years, citing the potential of a CBDC to boost public trust in the central bank and its financial services. The bank, on the other hand, remained concerned about potential linked concerns such as its impact on financial stability and potential threats to the traditional banking system.
Ukraine’s Ministry of Digital Transformation partnered with the Stellar Development Foundation earlier this year to build digital assets and CBDC infrastructure strategy.